St. Paul Fire & Marine Ins. Co. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa, Am. Home Assurance Co., New Hampshire Ins. Co., 890 F.3d 1265

Imperial Sugar refinery explosions caused multiple wrongful-death and injury claims; AIG insured Imperial with a $26 million general liability policy (AIG GL) and an unlimited workers’ compensation policy (AIG WC).
AIG negotiated global settlements of many claims totaling about $28.5 million, allocating ~90% to AIG GL (~$25.5M) and ~10% to AIG WC (~$3M).
Imperial’s excess insurers, St. Paul and AGLIC, contended AIG’s allocation prematurely exhausted the GL policy and breached duties to Imperial by exposing excess insurers to liability.
St. Paul sued AIG (naming AGLIC as a defendant); AGLIC answered and cross-claimed against AIG asserting identical rights and sought to recover under equitable subrogation.
District court granted summary judgment for AIG; St. Paul later voluntarily dismissed its appeal, leaving AGLIC as the sole appellant.
The Eleventh Circuit held the district court lacked diversity jurisdiction because AGLIC’s interests were coextensive with St. Paul’s and AGLIC should have been realigned as a co-plaintiff, destroying complete diversity; vacated and remanded with instructions to dismiss.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether parties must be realigned for diversity based on their true interests	St. Paul/AGLIC argued pleadings showed complete diversity and district court had original jurisdiction	AIG argued court should realign parties and, if realigned, diversity would be destroyed	Court held realignment doctrine requires aligning parties by true litigation interests; St. Paul and AGLIC were on same side and AGLIC should be realigned as a plaintiff
Whether supplemental jurisdiction supports AGLIC’s cross-claim after loss of original diversity	Plaintiffs argued original complaint conferred diversity at filing and §1367 allowed the court to retain related claims after St. Paul’s dismissal	Defendant argued supplemental jurisdiction cannot exist absent original jurisdiction over at least one claim; realignment destroyed original jurisdiction	Court held supplemental jurisdiction cannot save the action once realignment destroys original diversity; no original jurisdiction existed, so dismissal required

City of Indianapolis v. Chase Nat’l Bank, 314 U.S. 63 (realignment doctrine: align parties by true interests for diversity jurisdiction)
City of Dawson v. Columbia Ave. Sav. Fund Safe Deposit, Title & Tr. Co., 197 U.S. 178 (courts must look beyond pleadings to parties’ true positions)
Indemnity Ins. Co. of N. Am. v. First Nat’l Bank at Winter Park, 351 F.2d 519 (5th Cir.) (realignment can destroy diversity where parties’ interests are identical)
City of Vestavia Hills v. Gen. Fid. Ins. Co., 676 F.3d 1310 (11th Cir. 2012) (applying realignment; parties with identical litigation interests should be aligned together)
Grupo Dataflux v. Atlas Global Grp., LP, 541 U.S. 567 (jurisdictional facts must support diversity at time of filing)
Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (supplemental jurisdiction requires original jurisdiction over at least one claim)